The Evolution of Solar Energy: From Niche to Cheapest

Back in 1953, the US acquired the first commercial silicon solar cell from Bell Labs. However, those early solar cells were not efficient at all. If you installed them on your roof, you'd end up spending around $300,000 a month just to generate electricity. But over the past 70 years, we've seen a significant decline in the cost of solar energy. In fact, it's now the cheapest it has ever been, with prices dropping by nearly 90% since 2009. Solar energy is now often a more cost-effective option than traditional sources like coal, natural gas, or nuclear power. This success story is a testament to what we can achieve when we invest in and innovate clean technology. By taking the right lessons from the rise of solar power, we can work towards developing and deploying other sustainable technologies that will help us create a more livable planet for future generations.

The rapid decline in the cost of solar energy is a remarkable achievement that is set to define the 21st century. In the 1970s, during the oil crisis, there was a significant push towards alternative energy research and development. Project Independence, a US federal government initiative, allocated over $8 billion towards solar research and development. This helped to double the efficiency of solar cells, and a Texan named Paul Maycock saw that increased production would bring down costs, much like calculators. However, President Reagan canceled the project before this idea could be fully tested. Japan and Germany were the countries that ultimately pushed solar technology forward. Japan developed small, powerful solar cells that could power watches, calculators, and toys. German policymakers introduced the most important policy in the solar industry - the feed-in tariff, which incentivizes homeowners and businesses to install solar panels by providing guaranteed payments for excess energy produced. The combination of technological breakthroughs and supportive policy led to a significant increase in solar installations, and as a result, the cost of solar energy has plummeted, making it cheaper than fossil fuels in many parts of the world. Which was basically a program that deployed solar at scale.

Here's how it worked.

In the early 2000s, China decided to make a big bet on solar energy. They saw that solar was getting cheaper and more efficient and they wanted to be part of that story. So the Chinese government offered subsidies and other incentives to companies that would invest in solar. At first, these companies were mostly small and unknown. But as demand grew, so did the industry. Big companies like Suntech emerged and started producing more and more solar panels at lower and lower prices. By 2011, China had become the largest producer of solar panels in the world, and prices had dropped by more than 70%. This was a game-changer for the global solar industry. Suddenly, solar was not just for wealthy countries like Germany. It was affordable for countries all over the world, including developing countries that desperately needed access to energy. And as the technology continues to improve and prices keep falling, solar energy has the potential to become the dominant source of energy for the entire planet."

Solar energy's remarkable journey from a niche technology to the cheapest and most reliable source of power for billions of people worldwide was made possible by the efforts of policymakers and governments. The falling prices of solar panels and solar energy were not a fluke, but the result of a carefully crafted plan to invest in research and development, and to create and subsidize new markets for solar. The German feed-in tariff, the Chinese subsidy program, and the US investment tax credit all played critical roles in bringing down the cost of solar energy. This remarkable success story provides a blueprint for how to replicate this success with other clean energy technologies like batteries, electric vehicles, and heat pumps. By investing in research and development, and by creating and subsidizing new markets for these technologies, we can replicate the success of solar energy and bring down the cost of clean energy to the point where it becomes competitive with fossil fuels.